Movie moguls sue Warner Brothers for “Hobbit” breach of contract

We all know The Hobbit, that Tolkien classic where a ragtag group of down-on-their-luck beings travel long ways to finally realize their dream and file a $75 million breach of contract claim in New York Supreme Court.

Haven’t heard that version of the story? Well, movie moguls Harvey and Ben Weinstein are looking to change the narrative just as “The Hobbit: The Desolation of Smaug” hits movie theaters worldwide.

The Weinsteins and their former company Miramax Co., filed suit in court, saying that Time Warner Inc.-owned Warner Brothers owes them $75 million in damages for the final two “Hobbit” movies in the trilogy. Warner Brothers, meanwhile, claims that they do not owe any funds.

While headed by the Weinsteins, Miramax originally owned the big screen rights to both Tolkien’s Hobbit and Lord of the Rings tales. In 1998, the company decided to sell the rights to Warner Brothers for $11.8 million plus 5 percent of the movies’ gross receipts. When the Weinsteins left Miramax and founded their own Weinstein Co., Miramax agreed to give half of those receipts to the two brothers.

Through the agreement, Miramax and the Weinsteins received $90 million for the Lord of the Rings movies and $25 million for the first Hobbit movie, according to The Wall Street Journal.

However, the disagreement comes within language of the payment contract. The contract says the Weinsteins and Miramax are owed receipts on the “first motion picture” based on each book, but not on “remakes.” However, nothing in the language stipulates what happens when a single book is split into multiple movies, such as what is happening with the Hobbit series.

Naturally, the Weinsteins want a piece of the action, but Warner Brothers views the second and third movies as remakes. According to the WSJ, Warner Brothers is attempting to keep the case out of court and have it be settled by an independent arbitrator.

Breach of contract suits are common in the legal industry, and InsideCounsel has the biggest ones covered: